Description of this paper

The Fed bought several billion dollars worth of U.S. government securities. The purpose of this action is to: decrease the size of the national debt. improve its financial position by investing in relatively safe interest-earning assets. stimulate the economy by increasing the amount of money in circulation. drive up interest rates to cool off inflationary pressures. 2. (1) Which of the following helps to provide for the smooth flow of money between nations? International Monetary Fund Foreign Exchange Bank World Bank International Exchange Center 3. (1) __________ are nonprofit, member-owned financial cooperatives that offer a full variety of banking services such as accepting deposits and making loans. Mutual thrift associations Credit unions Commercial banks Mutual fund companies 4. (1) The ___________ rate represents the interest rate charged by the Fed when loaning funds to member banks. discount prime federal funds reserve 5. (1) Open market committee operations involve: Monitoring the reserve requirement. the buying and selling of bonds. increasing and decreasing interest rates. participating with the IMF. 6. (1) The Federal Reserve fulfills its role as a "lender of last resort" when it loans funds to: small businesses that are unable to obtain loans from other sources. banks during banking emergencies. major corporations that are on the verge of bankruptcy. the federal government when deficits exceed borrowing limits set by Congress. 7. (1) The Fed requires that banks hold a percentage of their deposits in a vault. This percentage is the __________. prime rate working capital requirement discount rate reserve requirement 8. (1) A __________ is a profit-seeking organization that receives deposits from individuals and corporations and uses some of these deposits to make loans. credit union Federal Reserve Bank commercial bank consumer finance company 9. (1) The ___________ represents one of the Fed's most powerful monetary policy tools. reserve requirement discount rate margin requirement working capital requirement 10. (1) The __________ primarily provides for the financing of economic development projects throughout the world. International Monetary Fund International Reserve Bank World Bank World Development Authority 11. (1) When the Fed increases the discount rate, banks: must purchase more government securities. must pay a higher rate when they borrow from the Fed. will lower the rate they charge to borrowers. must hold a greater amount of funds in reserve against deposits. 12. (1) When the Fed increases the reserve requirement, banks: must increase the dollar volume of loans they make to customers. must pay more to borrow from the Fed. have fewer funds available for lending. will find their balance sheets temporarily out of balance. 13. (1) Which of the following represents one way the Fed increases the amount of money in circulation? Reduce taxes Raise the discount rate Buy government securities Increase the reserve requirement 14. (1) Which of the following represents the technical name for a checking account? Free deposit Variable annuity Demand deposit Certificate of deposit 15. (1) A __________ represents an agreement by a bank to pay a foreign company a given amount if certain conditions are met. certificate of deposit banker's acceptance callable option letter of credit 16. (1) The organization responsible for conducting monetary policy in the United States is the: Federal Trade Commission. Council of Economic Advisors. Federal Reserve System. Federal Monetary Control Authority. 17. (1) A rapid increase in the money supply may lead to a(n): increase in the rate of inflation. recession. decrease in interest rates. decrease in spending by consumers and businesses. 18. (1) The board of governors of the Federal Reserve System determines: exchange rates. U.S. monetary policy. and monitors the inflows and outflows of gold reserves to ensure a stable money supply. how much money the U.S. will loan to foreign governments. 19. (1) Which of the following represent an independent agency of the U.S. government that insures bank deposits? National Deposit Assurance Cooperative Federal Deposit Insurance Corporation Insurance Corporation of America Deposit Protection Fund 20. (1) A __________ represents an unconditional agreement by a bank to pay a specified amount at a particular time. Certified trade acceptance Banker's acceptance Letter of credit Guaranteed funds agreement 21. (1) Under the Federal Reserve Act of 1913: membership in the Federal Reserve System was made voluntary for all banks. federally chartered banks were required to join the Federal Reserve System. membership in the Federal Reserve System was required of all banks that had deposits of more than $1 million. all banks were required to hold reserves equal to at least 50 percent of their deposits. 22. (1) The banking panic of 1907 and the resulting cash shortage led to the formation of the: Federal Reserve System. Comptroller of the Currency. gold standard for currency, and the establishment of a gold repository at Fort Knox. FDIC.

Paper#10795 | Written in 18-Jul-2015

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